PPF Telecom Group to approach EC over regulatory rulings in Bulgaria

PPF Telecom Group B.V., which includes the Yettel telecom operating companies and the CETIN telecom infrastructure companies, is dismayed by regulatory decision taken in Bulgaria that will effectively undermine Bulgaria’s telecom marketplace and lead to the creation of a dominant player to the detriment of consumers, the group said in a media statement.

“Acting on behalf of Yettel Bulgaria and CETIN Bulgaria, PPF Telecom Group intends to raise these matters with the European Commission, and in the meantime reserve all their rights,” the statement said.

“Bulgaria’s Commission for the Protection of Competition (CPC), in a move that we believe contradicts accepted European norms and practices, has approved a set of transactions that will lead to enormous concentrations of market share and power in the hands of Bulgarian telecom operator Vivacom and its ultimate owner, United Group,” PPF Telecom Group said.

The CPC has given its approval to transactions that will lead to Vivacom controlling close to 70 per cent and 50 per cent of the internet access market respectively in the region of Rousse and the regions of Varna, Razgrad, Silistra and Sofia City.

This decision was taken despite two years of court hearings and following a court-ordered in-depth review that shared the market’s concerns about the concentration of market power, the statement said.

“Yettel Bulgaria and PPF Telecom believe the CPC’s decision shows blatant disregard for recent European rulings that have prevented transactions that would have created regional concentrations of market power.

“PPF Telecom and its Yettel and CETIN companies have always advocated for robust, competitive and diverse markets, which offer consumers the freedom of choice, encourage price competition and promote business transparency,” the statement said.

Since entering the Bulgarian market, PPF Group, the parent of PPF Telecom and bTV, has invested nearly two billion leva in the country’s telecommunications and media sectors, PPF said.

“As one of the leading employers and taxpayers in Bulgaria, PPF contributes immensely to the prosperity of the country and its people.”

Yettel Bulgaria and CETIN Bulgaria are also trailblazers on the country’s path towards reducing CO2 emission, having recently signed long-term agreements to source solar-generated electricity from Electrohold, one of Bulgaria’s leading renewable energy producer, the statement said.

“Therefore, recent CPC decision-making has raised our concerns with regard to its forthcoming review of the proposed acquisition of Bulsatcom’s infrastructure by Slovenia Broadband, which is 100 per cent owned by United Group.

“If this proposed acquisition is approved, it would lead to a total concentration of the whole national market and infrastructure power far exceeding the normal thresholds acknowledged in all other European Union markets.”

The statement said that PPF Telecom entities had repeatedly raised concerns with CPC regarding the sustainability and protection of the level-playing field in the fixed-line sector in the wake of the segment’s consolidation.

One of the most concerning and blatant disregards of regulatory procedures emerged when it turned out that the acquirer of Bulsatcom failed to notify CPC promptly about the deal, as well as the source of its funding being a loan of 127 million euro extended by United Group, the owner of Vivacom.

The CPC decision dated June 15 2023 highlights Vivacom’s leading position in Bulgaria’s television distribution market, where it holds a 32.9 per cent share, the statement said.

Vivacom also leads the fixed internet market, controlling 31.4 per cent of the total market.

“If Vivacom’s acquisition of Bulsatcom’s infrastructure is approved, competition will be further undermined, with them jointly controlling close to 70 per cent of the national TV distribution market and 40 per cent of the national internet access market.

“These market shares are unheard of in any other European Union country. They would weaken competitive pressure in Bulgaria’s bundled services market, potentially leading to fewer choices for consumers and higher prices,” the statement said.

PPF Telecom, Yettel Bulgaria and CETIN Bulgaria remain steadfast in their commitment to transparent business practice and fair acquisitions. That is why we are deeply concerned about the current regulatory environment in Bulgaria, and the lack of transparency around the funding of the proposed Vivacom-Bulsatcom infrastructure transaction.

“We strongly urge all relevant regulatory and law enforcement authorities in Bulgaria to undertake a comprehensive review of the proposed transactions,” PPF Group said.

Vivacom said in a statement on July 5 that it firmly rejects the allegations made by its competitors A1 and Yettel.

“Their statements in response to the decision by the Bulgarian Commission for Protection of Competition (CPC) to grant clearance for Vivacom to acquire two cable operators, Networx and Telnet, are irresponsible and contain several wildly inaccurate and misleading allegations,” Vivacomsaid.

The Bulgarian fixed broadband and pay TV market is a healthy multi-player environment, with three national operators and hundreds of regional and local market players.

The statement said Vivacom currently holds 31 per cent of the fixed broadband market and 33 per cent of the pay TV market in Bulgaria (based on the number of subscribers).

The fixed broadband market share of A1 and regional and local market players is 28 per cent and 35 per cent respectively, and Vivacom continues to face strong competition in relevant regional markets including northern Bulgaria, the statement said

By comparison, elsewhere in Southeast Europe, Deutsche Telekom holds over 60 per cent of the fixed broadband and pay TV market in Croatia and over 50 per cent in Greece (via its controlling stakes in local incumbents).

“It is noted that A1 has not raised concerns about its dominant position in Austria where it has almost 50 per cent of the country’s broadband subscribers. Neither have A1 nor Yettel made any complaints in Serbia where United Group’s operator (SBB) has been consistently denied the entry into mobile market,” the statement said.

“The co-ordinated statements from A1 and Yettel are misleading and inconsistent with the CPC’s findings. Their joint attempt to include Bulsatcom as part of Vivacom’s market share is wholly inaccurate and shows evidence of collusion.”

The statement said that Vivacom has continued to gain market shares in 2022 and 2023 organically by providing innovative products and a superior customer experience.

Since United Group entered the Bulgarian market with the acquisition of Vivacom less than three years ago, the Group has invested 3.5 bln leva in the country, according to the Vivacom said.

“The growth of Vivacom has accelerated recently due to significant investments in infrastructure and the introduction of superior products like Eon TV, 10 Giga fiber optical network and 5G mobile unlimited plans.  The level of services and products offered on the Bulgarian telco market has improved significantly over the last two years, which has resulted in increased competition.”

The statement said that the CPC had reviewed Vivacom’s cases “with an exceptional level of scrutiny, conducting a forensic analysis of the facts, resulting in a comprehensive 104-page decision”.

“The level of detail in the CPC enquiry is unprecedented in Bulgarian competition matters and more than meets best practice for countries in the European Union. Vivacom has actively cooperated with the review and has responded to over a dozen questionnaires sent by the CPC. It has also submitted detailed reports on both transactions prepared by NERA Economic Consulting, a leading international expert in merger control.”

The statement said that Vivacom had always fostered pro-competitive synergies, innovation, and improved services for Bulgarian consumers.

“We encourage all telco companies in Bulgaria, rather than making attempts to manipulate Bulgarian consumers and influence authorities with media statements, to focus on bringing value to the customer so that we all as an industry continue to develop our proposition and the quality of our service.”

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